Oil and gas will be crucial components of the world’s energy future, according to DNV GL’s forecast of the energy transition.
While renewable energy will grow its share of the energy mix, oil and gas will account for 44 per cent of world energy supply in 2050, compared to 53 per cent today.
Gas will become the largest single source of energy from 2034.
DNV GL’s Energy Transition Outlook (ETO), a forecast that spans the global energy mix to 2050, predicts that global demand for energy will flatten in 2030, then steadily decline over the next two decades, thanks to step-changes in energy efficiency.
The fossil fuel share of the world’s primary energy mix will reduce from 81 per cent currently to 52 per cent in 2050.
Demand for oil will peak in 2022, driven by expectations for a surge in prominence of light electric vehicles, accounting for 50 per cent of new car sales globally by 2035.
However, the stage is set for gas to become the largest single source of energy towards 2050, and the last of the fossil fuels to experience peak demand, which DNV GL expects will occur in 2035.
Gas will continue to play a key role alongside renewables in helping to meet future, lower-carbon, energy requirements.
Major oil companies intend to increase the share of gas in their reserves, and DNV GL expect an accelerated shift by 2022 as they decarbonise business portfolios.
While demand for hydrocarbons will peak over the next two decades, significant investment will be needed to add new oil and gas production capacity and operate existing assets safely and sustainably.
However, the results of DNV GL’s model reinforce the need to maintain strict cost efficiency in order to achieve the margins necessary for future capital and operational expenditure.